Budgeting for a family differs from that for a single person.
~ Saturday, September 2, 2023 Blog Post ~
I just read this CNBC article regarding a supersaver who is a Financial Independence, Retire Early (FIRE) adherent. It made me understand more how a family’s budgeting situation differs from that for a single person.
The supersaver is a millennial like myself, but he is a married man with a young family. I want to tackle how being a single person makes me different from the article’s subject and leads me to become much more of a supersaver.
MY DIFFERENCES FROM THE CNBC ARTICLE’S MILLENNIAL SUPERSAVER SUBJECT:
- I don’t and would rather not indulge in expensive hobbies.
- I don’t intend to increase my spending, even if my income increases. Being a cost-cutting miser, I consider myself an “intentionally poor” person. Haha.
- I don’t intend to inflate my lifestyle whether or not I have an additional income.
- Since I’m childless, I don’t spend on childcare.
- As a single person, my financial goals have remained the same since I joined the workforce in 2004 after my college graduation because I don’t have and intend to raise my own family.
SIMILARITIES WITH THE CNBC ARTICLE’S MILLENNIAL SUPERSAVER SUBJECT:
- I also strive to avoid financial insecurity.
- Cost-cutting in my monthly budget is constant.
I strive to have my expenses down to practically nothing. Saving 100% of one’s income is possible and surely fantastic. Haha.
3. I think it’s an interesting and great personal finance experiment to have an unending focus on one’s finances for a sustained period.
This personal finance measure is quite extreme, but it is possible for a single person like myself. If a person can concentrate on his finances for a long time, it would be fun and is surely financially rewarding.
4. I work hard to have a large savings stash to achieve and maintain long-term financial stability and flexibility.
5. Although FIRE offers a framework to help filter one’s spending decisions, I’m not a supporter of this movement. Yet, similar to the CNBC article’s millennial supersaver subject, I also concentrate on tamping down on my expenditures that have the largest effect on my budget.
I focus on cutting back on dining out and utilities with variable costs. I try to find the time to cook more at home and stop ordering fast food. Furthermore, I NEVER shop for clothes, shoes, bags, and accessories. It takes years before I replace them. Paying for vanity services such as pampering spa and massage treatments are not a component of my monthly budget.
If I were to list the things that bring me joy, well, zero spending makes it atop my list. Haha. Well, people are different from one another in millions of ways. What you consider fun and brings happiness may be uninteresting for me, right?
At this point, I’m not really demanding when it comes to the things that make me happy. Being a miser, I think being able to save more money and ensuring my continued financial stability and comfort; not getting any serious illnesses; and living quietly make bring me joy.
I love that idea from the CNBC article of a “near-maniacal focus on saving” toward one’s early retirement goal. I also concentrate on investing for the future first. But unlike the article’s millennial supersaver subject, for me, second is not sensible spending but cutting back on expenses and saving more.
Yes, I consider myself an EXTREME SUPERSAVER. Being single allows me to focus more on my finances. Additionally, my budgeting practice and personal finance views are different from that of a person with a family. Having children and a spouse to look after and the costs associated with them make the latter’s financial priorities completely dissimilar to my situation.
I agree that these FIRE-inspired techniques mentioned in the CNBC article make stashing money for the future and evading splurging on items bringing immediate gratification much more effortless.
THE CNBC Article:
Supersaver who stashed 78% of his salary has one regret: ‘We might have been too extreme, tipping into misery’
By Ryan Ermey, August 31, 2023
Scott Rieckens remembers a time when his lifestyle seemed to control his spending choices. He and his wife Taylor were living an upwardly mobile lifestyle in San Diego, but it turned out their budget was upwardly mobile, too.
“We lived in a beautiful beach town, drove a BMW, dined at high-end restaurants and often indulged in expensive hobbies. Essentially, as our income increased, so did our spending,” Rieckens, 39, tells CNBC Make It. “Instead of saving or investing, we were using any additional income to inflate our lifestyle while keeping our heads in the sand. We found this to be the easiest way to avoid our financial insecurity.”
When Rieckens discovered the FIRE movement — short for financial independence, retire early — a light went on. “It was basically describing a way out of my situation,” he says.
In 2017, the couple embarked on a series of cuts to a monthly budget that was hovering around $10,000. “It didn’t take much to slash that in half,” Rieckens says.
Like many FIRE adherents, the couple aimed to save as much of their income as possible in order to invest their savings in low-cost index funds. The goal: amassing enough savings to be able to safely live on withdrawals from their portfolio in perpetuity.
At first, the couple went full-throttle, even going so far as to briefly move in — with a brand-new baby in tow — with Rieckens’ parents in Bellvue, Iowa. As they had in San Diego, the couple worked full-time, relying on Rieckens’ parents to provide some free childcare.
With their expenses down to practically nothing, the Rieckenses saved 78% of their income.
Watch the documentary about their journey toward early retirement — Playing With FIRE — and you’ll quickly understand that this lifestyle was occasionally trying for the young couple.
“Looking back, we might’ve been too extreme, tipping into misery, not from deprivation but the unending focus on finances,” Rieckens says. “The experience taught us our limits, but I wouldn’t recommend that kind of intensity for a sustained period of time.”
Ultimately, the couple didn’t retire — not yet anyway. Having a large stash of savings gives them financial stability and flexibility, but as their lives have changed, so have their goals. And reaching FIRE as quickly as possible is no longer a priority.
“Staying committed and motivated [is a challenge], especially during periods of life volatility,” Rieckens says. “This is something that still lingers and has resulted in us taking our foot off the savings gas a bit.”
Reaching FIRE: ‘We aren’t in a hurry anymore’
These days, the Rieckenses live in Bend, Oregon, and still apply many of the principles they picked up from the FIRE movement.
One is a focus on tamping down on the expenses that have the biggest impact on their budget. When the couple first looked where they could cut back, they focused on what Rieckens calls the “big three”: housing, cars and food.
They ditched the BMW using SwapALease and opted for a $6,000 used Honda. They stopped dining out and started cooking more at home. And by relocating, they cut their housing costs substantially.
It’s a mindset that persists today. “We drive a sensible car and scrutinize big purchases, being mindful of smaller expenses, too. For us, FIRE gave us a framework to help us filter our spending decisions,” Rieckens says.
That framework: Are we spending on the things that make us happy?
When the couple first embarked on their journey, they each made a list of the things that brought them joy. As it turned out, the things they valued — family, friends, time together and time outdoors — didn’t come at a cost.
It made stashing money for the future, and avoiding splurging on things that brought immediate gratification, like nice cars or fancy dinners out, that much easier, Rieckens says.
A near-maniacal focus on saving as much as humanly possible toward the goal of early retirement wasn’t bringing the family much happiness, either. So they relaxed their savings goals. They still have “budget parties” where they sit down and go over their finances, but care much less about hitting their FIRE number.
Instead, with every paycheck, they focus on investing for the future first, and then spending (sensibly) second. With that mindset, Rieckens is confident the couple can balance indulging in the things that make them happy now while keeping them financially stable for years to come.
“All the initial work paid off so well, we feel [financially] comfortable,” Rieckens says. “We aren’t in a hurry to reach FI anymore. That’s the beauty of a life designed with intention.”
References:
https://jasonsears78.medium.com/why-for-me-intentional-poverty-is-so-awesome-5f581eb9f6e2
